In The News 5-13-2005

G2 Switchworks recently blasted what it called ASTA’s “baseless
claims” about the company’s ownership of technology. In letters
issued May 2 to the Justice and Transportation departments, ASTA
urged the agencies to probe the airlines’ possible future ownership
and control of the start-up.

“There is an indication that the airlines are once again poised
to involve themselves in the ownership and, possibly, control of
significant influence of a firm with GDS-like characteristics,”
ASTA’s letter stated.

G2’s CEO responded by defending the company.

“We were disappointed to be the subject of baseless claims by
ASTA,” Alex Zoghlin said in a statement. “It is further
disappointing to note that ASTA never contacted G2 to learn the
facts ... before making their uninformed statements.”

Zoghlin noted that he and company employees control the majority
equity and voting interests in G2. Norwest Venture Partners and
Texas Pacific Group Ventures made a $10 million minority investment
and hold two seats on the G2 board of directors.

Seven airlines designated the Chicago-based company as an
alternative GDS provider, and six of the airlines prepaid for
millions of tickets in exchange for the opportunity to take a small
equity stake and discounted fees.

“G2 was not founded, nor is it funded or controlled by any
individual or airline or collection of airlines,” Zoghlin said.
“The airlines that have agreed to prepay G2 for distributing
tickets will receive the opportunity to hold a very small
collective equity stake in G2 and will not receive ... the ability
to designate any member to G2’s board of directors or otherwise
direct G2’s strategic planning or day-to-day operations.”

American, America West, Continental, Delta and Northwest prepaid
up to 8 million tickets, G2 said. United signed on a few days
later, but G2 won’t say how many tickets United prepaid. And US
Airways tapped G2 for distribution but didn’t pay for tickets up
front.

The arrangement also raised concern at the Association of Retail
Travel Agents (ARTA), which issued a statement supporting ASTA and
asking the government to “re-examine these airlines’ back-door
efforts to strengthen their anticompetitive control over the
airline reservations marketplace.”

United Cuts Pension Plans

United Airlines received bankruptcy court approval this month to
terminate its defined-benefit pension plans for employees, but the
victory could come at the cost of an angry and disillusioned
workforce. United insisted it had no choice but to seek termination
of the plans, which will be taken over by the federal Pension
Benefit Guaranty Corp. but with substantially reduced benefits, up
to 60 percent in some cases. In a message to employees, United CEO
Glenn Tilton called the pension termination “difficult but
necessary” and made an appeal for labor peace. It’s unclear,
however, how well Tilton’s message will go over with employees. The
pension cuts, coming on top of wage and benefit concessions, have
outraged many employees and could prompt a strike. United’s parent
company UAL reported a $1.1 billion loss for first-quarter
2005.

New Perks for ‘Happy’ Agents

Some travel agents can look forward to new perks. Happy
Vacations this month launched the Partnership Education Recognition
Klub, or Perk, which allows participants to earn points for
bookings with Happy Vacations for travel after May 1. The company
credits agents’ accounts with points equal to 5 percent of their
bookings; Perk members can cash in their points for personal travel
or for continuing education at the Travel Institute relating to
destinations that Happy sells. www.happy-vacations.com